This post is part of a series on some of the most memorable companies that have disappeared.
Ah WorldCom. Aside from its storied history as one of the world's biggest accounting frauds, I remember it as my first cell phone company. My husband bought me a WorldCom phone as a gift and it turned out to not only have terrible service, but ridiculous billing practices, and we ended up paying to get out of the contract as I recall. I remember thinking that there was something really wrong with that company and later wishing I had pursued it as an investigative story, since I was then a writer at BusinessWeek Online and WorldCom was a hot stock.
But no, I never got onto such a story. In fact, I followed WorldCom's stock with interest since I had picked it in an office stock-picking contest years earlier and felt some satisfaction at its meteoric rise through the 1990s (even though I never actually owned the shares; it was just part of a fantasy portfolio).
But here's the WorldCom history that is worth remembering now: WorldCom started as Long Distance Discount Services (LDDS) in 1983. It changed its name to WorldCom in 1995. A series of mega-mergers transformed the company, culminating in its $40 billion deal for MCI. It was rechristened MCI WorldCom in 1998, the second largest long-distance calling company. The following year, just as it announced a deal with Sprint (now Sprint Nextel (NYSE: S)) that never came to fruition, the telecom industry started a prolonged downturn.
As WorldCom merged itself into hugeness, its charismatic founder and CEO, Bernard Ebbers (known as the telecom cowboy), gained great riches and notoriety. But as the company flailed in the telecom downturn, management resorted to accounting tricks to try to keep the stock afloat. By 2002, an elaborate accounting fraud was revealed, WorldCom admitted to $3.85 billion in misstatements and filed for bankruptcy. The accounting fraud tally ultimately grew to a shocking $11 billion.
Ebbers was convicted of securities fraud and conspiracy in 2005 and is currently serving a 25-year prison sentence in Louisiana.
In bankruptcy, WorldCom changed its name back to MCI, reorganized and began an effort to pay back creditors. Bondholders got about 36 cents on the dollar. The once high-flying stock became worthless. In 2006 Verizon Communications (NYSE: VZ) purchased MCI, and most of its remaining operations became what is now called Verizon Business. There, is where the WorldCom story ends.
Let us know in the comments what you remember about WorldCom. And be sure to check out other Companies That Have Vanished.










Reader Comments (Page 1 of 1)
6-06-2008 @ 9:26AM
Jay said...
This was never a surprise to me. My dad worked for MCI before worldcom bought them. He always said Ebbers was a crook.
6-06-2008 @ 11:49AM
linda clark said...
I was an employee of MCI 1975-1987. Our
Chairman/Ceo Bill McGowan created the competitive long distance industry and then saw
and named the beginning of the Information Age,.
Our current telecom/data/internet lives sprung from these efforts...we were selling MCI Mail (email) to corporations in 1985, just as PC's were coming to the universal corportate desktop. The company was exciting to work for, we all worked hard in uprecedented territory, we created a new industry and opportunities for business then residential users.
There were pains, but the overall result is remarkable since those early days of placing microwave towers on tops of buildings and in fields.
As the industry evolved into more unprecedented territory and the uncertainty to be able to compete in delivering local distribution, MCI was bought by Worldcom. The judges and jury got it
right, Bernie Ebers and his accomplices destroyed
the company with greed.
The downfall of the culture of Worldcom, not MCI
ruined thousands of current and former hard working employees' financial lives, we lost our personal net worths. (From the beginning Bill McGowan said we are not a "womb to tomb company" peformance was the expectation, ESOPS were created early on).
In addition to employees, millions of stockholders lost their investments due to the greed of a few. It was the worst form of corporate greed, direct personal benefit. Enron is the poster child for corporate demise but the actions of the Worldcom principals was the bigger immoral sham.
6-07-2008 @ 2:32AM
Kam said...
What I remember about MCI is the numerous and annoying solicitation calls to buy into their service. "Family and friends" and other gimmicks were hallmarks of the company. If they could con one person to enroll with them, they would pressure that person to convert all of their friends and family members or give them names for them to harass. This was before the phone block registration. I hate to be rude to phone salespersons, but I must admit to feeling very pleased when MCI failed because their phone torture was over.
6-13-2008 @ 11:15AM
Suzi-evansmom said...
My ex-husband without my consent, agreed to sign us up about 1990 for their special deals on long distance charges as he was a truck driver and gone for weeks at a time. I was not impressed with the bill that would charge sometimes 18.00 for a 4 minute call. They blamed the pay phones on the extreme charges. My ex claimed as I did, that he was useing his phone card to deflect these charges. We ended up owing the Company $1,800.00 for 1 and 1/2 months of service. I was outraged, and we never got our 'free' 10 minute call they offered in the package. They agreed to settle for a 3rd of the amount as we refused to pay, and we never did pay off the bill, resulting in a bad credit listing. What makes me so mad today is we just went with the Fios bundle three days ago offered by Verizon. I've waited since Oct. 07 to get their high speed. But my mother-in-law's long distance 'carrier' is MCI and yet Verizon says it reguires a little more haggling and switching over so our whole house-hold is on the same bundle. Now we will be paying $181.00 for the completed package, and only saving $31.00 instead of the original quoted amount of $150.00 the salesman put in writing last week. Mean while the tech for Verizon ran a cord to the phone pole and another tech has to come out today to take off the 'copper' and re-enstall her phone line disrupting service for a minute in order to 'switch' it over. The really funny thing is her bill says "Verizon/MCI" so we expected both phone numbers to be be easily combined in the packae. Not so said the techs. MCI actually runs their service through Verizon's line as a curtiousy-by-way. So we get billed attentional charges for the same company that ripped my other family off 18 yrs ago. There is no difference in the price at all.
6-13-2008 @ 1:17PM
Meg said...
Your wrong. MCI was MCI in the early 80's. LDDS was a completely different company. I worked for MCI. At that time, they were taking on AT&T. AT&T was pulling every dirty trick in the book to stop equal access from coming in. MCI was a good company at that time.
6-25-2008 @ 10:39AM
cece said...
#2 Linda Clark, your story is the same as my ex-husbands who started with MCI in 1978. To bad that he, like many other, put his faith in the company stock purchases and retirement plan. He was one of the few who remained with the company when WorldCom took over. He was very unhappy with the company and how little they knew about the business. It wasn't long before he was out of the job and his retirement and stock all gone.
6-25-2008 @ 10:53AM
Nancy said...
In the early 80's M.C.I was Western Union Int'l. I remember it well, I worked for the company from 1980-1984. At the Battery Pk. Plaza site. I think it was in 1983 or '84 that M.C.I bought W.U.I.
6-25-2008 @ 11:08AM
Nancy said...
I was wrong mci bought western union int'l. Not that they used to be WUI.
6-28-2008 @ 10:21AM
Brenda said...
I worked for CompuServe (Internet Service Provider) which ended up being bought by MCI, Bernie Ebbers, in a 3-way deal with AOL.....boy, how Ebbers sure RUINED a perfectly good company (CompuServe). Myself and alot of good hard working people who was with CompuServe from its beginning, lost LOTS of money. Bernie is where he needs to be until his last breathing day.
7-07-2008 @ 10:03PM
TJ said...
Wow. Talk about revisionist history. Bernie didn't ruin CompuServe. He had nothing to do with it. John Sidgmore, former CEO of UUNet, became vice chairman of WCOM when the merger with MFS was completed. Sidgmore negotiated that entire aol, compuserve deal, gloated about it to the Wall Street Journal and Bernie was totally hands-off the UUNet side of WorldCom. MCI didn't have to accept WorldCom's bid. There were other players interested, so let's not pretend MCI has "clean hands" in what happened. After the merger, MCI's Bert Roberts became chairman and MCI's Tim Price ran the local, long-distance side and Sidgmore continued the Internet side. MCI execs headed up almost all of the key departments. UUNet's Sidgmore remained vice-chairman all the way through to WorldCom's collapse. All that leased capacity that was at the heart of the accounting fraud was there because Sidgmore insisted upon it. Sidgmore dumped most of his stock in 2000, just before the downward spiral began. Coincidence?
7-10-2008 @ 1:39PM
Candy2008 said...
My aunt used to work for this company. She lost everything when the company went down. She isnt even a reflection of her former self. So sad how many people were effected from the underhanded acts of others in power. I did an internship at MCi for 2 summers. The atmosphere there was awesome.